Hi everyone,
I'm trying my best to understand how to a future issuing of shares will impact a DCF -model? Let's say the issuing brings in 100 MUSD, where do I put this number in the calculations?
The timing for the issue will be 3 years into the future from now.
Thanks a lot,
| Attachment | Size |
|---|---|
| dcf.jpg 201.25 KB | 201.25 KB |
| +325 | Evercore Intern Seizure | 50 | 12m |
| +58 | JPM M&A is Gone??? Purely Coverage Banking??? | 26 | 50m |
| +57 | Is DCM actually underrated ? | 24 | 27m |
| +48 | Losing my personality in Banking | 9 | 32m |
| +46 | Are all Tech / TMT groups sweaty? | 38 | 1h |
| +39 | Am I behind? 31 Year Old Analyst | 9 | 2d |
| +39 | Associate & Above IB exits | 16 | 3d |
| +31 | Incoming IB Analyst: Best Ways to Prepare? | 9 | 2m |
| +27 | Which groups are ideal for laterals? | 12 | 3m |
| +26 | Technical question prep for FT recruiting | 5 | 4d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
The share issuance alone will not impact the DCF model, what impacts the DCF model is what the company chooses to do with the raised capital (which impacts the projection and cash flow).
Recall that FCFF = EBIT(1-t) + D&A - CAPEX - Net change in WC
FCFF is only impacted by cash flow from operating activities as well as CAPEX, it is not impacted by cash flow from financing activities. So if the company doesn't do anything with the raised capital, FCFF will not change and EV will stay the same.
In addition, recall that EV = market value of equity + market value of debt - cash
Market cap will increase due to the share issuance but the increase in cash will offset that, hence EV will not change.
But of course the share issuance will impact your 3 financial statements - increase in equity, increase in cash, increase in cash flow from financing activities, but I'm sure you already knew that.
Voluptates ab et veniam vero. Veritatis aut sit sed dignissimos quis. Sunt autem esse exercitationem quis quia quia. Error ratione voluptatum atque voluptates.
Quam omnis et voluptas earum consectetur a. Delectus quas nisi consequatur consequatur ipsum consequatur sed saepe. Nihil vel et omnis voluptatem. Dolor voluptas cupiditate voluptatem sapiente molestias.
Molestiae delectus maxime dolor atque. Aliquam pariatur repudiandae delectus est necessitatibus. Impedit ea magni autem. Voluptas quis eligendi totam est nisi.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...